Whistleblowers: Who's the real bad guy?

WHISTLEBLOWERS: WHO'S THE REAL BAD GUY?

The popular notion persists that whistleblowers are crazy and vengeful
malcontents.

This goes against overwhelming statistics that show they are well-
educated, well-liked and committed employees, generally in middle-
to-senior-level posts. Yet, with all too few exceptions, whistleblowers
continue to be ostracized and humiliated by the companies they hope
to improve. Worse, in more than half of whistleblowing instances,
the charges are ignored.

When an employee steps forward and legitimately accuses an organization
of wrongdoing, it can bring out the worst in everyone. The hierarchy-
-right up the line to the CEO and the board, if the allegations are
serious enough--may enact one of several scenarios: The company may
instigate a cover-up. It could make the whistleblower (instead of
the allegations) the issue by trying to discredit the individual.
It could retaliate against the whistleblower. Or, in perhaps the most
insidious of the lot, the company could pretend to listen, appoint
the whistleblower to solve the problem, deny access to needed information-
-and make the whistleblower the scapegoat when the wrongdoing persists.

Fear of bad publicity, expensive litigation and loss of business can
make a company hostile and defensive, usually at the expense of the
whistleblower's personal or professional reputation. The individual'
s coworkers get suspicious and angry because their expertise or ethics
may be suspect. The whistleblower's family becomes anxious and insecure:
"If we lose that paycheck, what happens to us?"

Then, of course, there is the whistleblower, who has stepped forward
to tell the truth, despite a jumble of contradictory emotions and
fears. Feelings of disloyalty are at war with those of obligation
and, possibly, outrage at something very wrong in the company and
frustration that no one seems to want to listen.

If that employee has blown the whistle not only on his or her boss
but also on the company by taking the case outside to other authorities
or to the media, the harsh truth is that this represents a failure
on everybody's part. It means the business had not allowed the normal
use of communications from the bottom up and that reporting procedures
had not worked--or that the whistleblower had not found them to be
receptive.

The sad fact is that in today's supposedly enlightened business world,
corporate America continues to treat its whistleblowers poorly. The
notion persists that it is disloyal and irresponsible to criticize
one's employer, notwithstanding the fact that the company has done
wrong. Making matters worse is the thicket of often contradictory
state and federal laws and procedures. These can help or hinder the
whistleblower in the recovery of damages, in reinstating his or her
job--even in addressing the company's wrongdoing itself.

Consider a few whistleblowing cases, some ending more happily than
others:

Chester Walsh, a former employee at GE Aircraft Engine, a division
of General Electric Company, gathered information for four years to
expose a defense contract fraud at the company. Senior company executives
and an Israeli general were accused of a scheme to divert U.S. funds
in connection with a contract involving Israel's purchase of GE jet
engines. Last year, a federal judge awarded Walsh $11.5 million under
provisions of the False Claims Act, a federal statute permitting employees
to sue their employers on behalf of the government and to collect
as much as a quarter of the assessments and fines. During the tortuous
legal process, Walsh was vilified as an employee just out for the
money.

Allan McDonald and Roger Boisjoly, engineers at Morton Thiokol Inc.
, testified before the Rogers Commission investigating the 1986 Challenger
shuttle disaster that there had been ongoing problems with the rocket'
s O-rings and that they had urged their supervisors and NASA officials
to postpone the fatal launch. Following their testimony, the engineers
were demoted to menial jobs. Only the intervention of the Commission
members got them reinstated.

Billie Garde, a Census Bureau employee in Oklahoma in 1980 and a single
mother of two, was ordered by her supervisor to misrepresent civil-
service test scores so he could hire incompetents. Garde, a former
schoolteacher, also was directed to recruit female ex-students as
sex partners for visiting political officials. When she refused and
blew the whistle, her manager fired her and helped her ex-husband
win custody of the children. Garde eventually regained custody with
the help of whistleblower advocates. She attended law school and now,
as a Houston attorney, represents whistleblowers.

Last year, an administrative law judge for the U.S. Labor Department
found that managers at the Oak Ridge National Laboratory had retaliated
against a technician who had expressed concern about radiation exposure
there. The worker, Charles D. Varnadore, had undergone colon cancer
surgery in 1989 and had subsequently appeared on television to voice
distress about the prevalence of cancer among his colleagues and the
lax protection against radiation. His supervisors transferred Varnadore
to a room full of toxic and radioactive substances and gave him useless
work. Martin Marietta Energy Systems, which runs the lab for the U.
S. Department of Energy, was ordered to pay Varnadore damages, the
amount to be set by Labor Secretary Robert B. Reich.

A. Ernest Fitzgerald, an Air Force financial analyst, battled the
military because of its wasteful practices during several administrations.
President Nixon fired Fitzgerald in 1969 after he exposed a $2 billion
overrun in an Air Force contract. (Fitzgerald was reinstated by court
order, but it took him until 1982 to be restored to his old job.)
He was the kind of civil servant the Pentagon loved to hate: He testified
before Congress about $7 claw hammers costing $436 and 25-cent washers
purchased for $693 each.

Resentful coworkers christened Fitzgerald and his staff "attic fanatics"
because of their cramped upper-floor Pentagon offices.

A Problem, You Say? You're Fired.

Discussions with experts, advocates, human resource professionals
and public interest groups about how organizations treat employee
whistleblowers illuminate a dismal picture. Other than outright dismissal,
retaliation can and does include demotion, false complaints about
job performance, reassignment and relocation, assignment of unsympathetic
coworkers or supervisors and otherwise making the job difficult, withholding
of pension, orders to undergo psychological examination, investigation
of finances and personal life, and harassment of family and friends.

"The menu of reprisals is limited only to the imagination," says Thomas
Devine, legal director of the Government Accountability Project (GAP),
a Washington-based public-interest watchdog group that assists and
represents both government and corporate whistleblowers.

Donald R. Soeken, who has been counseling whistleblowers since 1978,
puts it directly: "If you blow the whistle on somebody below you,
you'll get a pat on the back. Above you? You'll be fired."

Soeken was a therapist at a public service health clinic when he realized
that federal agencies were using fitness-for-duty psychiatric examinations
to weed out whistleblowers. The strategy, he found, was to find the
individuals eligible for disability discharges, ending their whistleblowing
claims. The object was to discredit their testimony and to make them
appear crazy. Soeken's subsequent testimony before Congress helped
abolish these examinations from some of the federal system, although
the practice persists.

While retaliation is still business-as-usual, a surprisingly large
number of whistleblowing charges die from benign neglect. "As a proportion,
retaliation isn't done in even half the instances," says Marcia P.
Miceli, associate dean for academic programs and professor of human
resources at Ohio State University. She and a colleague, Indiana University
Professor Janet P. Near, have written extensively on whistleblowing,
including Blowing the Whistle (Lexington Books, 1992).

"The typical response is to ignore the charges," Miceli continues.
"Corporations will say there is no merit in them, but corporations
need to communicate and explain their actions-even when they do find
no merit."

In the midst of such unremitting negatives, surely there must be some
ray of hope, some enlightened companies that not only foster communication
among employees who are compelled to report problems, but also encourage
them to come forward. After all, the past few years have seen a meteoric
rise in ethics programs and all the trappings of compliance systems
that go into them, including confidential hotlines and employee surveys,
ombudspersons and neutral-party inspector generals. Then, why is
whistleblowing still treated as it was in the Dark Ages?

To answer this, we need to ponder some of the larger ideas that motivate
ethical behavior in America.

The United States has been weaned on the notion that there are no
moral absolutes, that whatever works is true or right, say the philosophers.
We have been conditioned to think that what may be right for one
person may not necessarily be right for another. Human beings, say
the behaviorists, are products of genetics and environment, with little
or no self-determination. The only thing meaningful is what you can
measure.

"Put this all together and you have a picture that leaves out the
immeasurables of ethics, religion and aesthetics," says W. Michael
Hoffman, director of the Center for Business Ethics at Bentley College
and a professor of philosophy. "Ethics are a matter of personal, rather
than community, choice. A lot of society works on the myth that 'telling
on someone is bad.'"

Professor Hoffman goes on to say that shared accountability and responsibility
as part of an organization are not valued today. The American corporation
has operated on the basis of goals set from the top, with little input
from below. Employees have been encouraged to put their shoulders
to the wheel and not to complain. There are signs that this mentality
is slowly changing: increased corporate interest in participatory
management, flattened hierarchies, work teams and shared goals. But
it will be decades before these elements shape and define the typical
organization.

Meanwhile, a whistleblower persists as someone who tattles and who
presumes to judge the whole organization, causing resentment of supervisors
and coworkers alike. In fact, a whistleblower's colleagues often can
be the biggest problem--stonewalling any investigation of the charges,
for example, or shunning the whistleblower and spreading rumors about
the individual's professional or personal life. It is not without
irony that in some companies, employees have taken to calling the
ethics hotline "1-800-RAT-FINK."

The epithets of "rat rink," "tattletale" and "snitch" notwithstanding,
it would certainly. seem that the concept of shared responsibility
moves enough people to come forward and blow the whistle when they
see something wrong in their workplace. Statistics aren't reliable,
but there are arguably at least several hundred thousand whistleblowing
incidents annually, in all walks of organizational life--ranging from
the "I think my coworker is stealing office supplies" calls to the
ethics hotline, to full-blown charges of widespread fraud with documentation
quietly accumulated over several years.

Understandably, most lesser whistleblowing charges do not reach the
media because they are not grievous and, in the best cases, are handled
by companies' ethical compliance programs. But serious whistleblowing
can go unreported because, under pressure, whistleblowers recant their
allegations, for instance, or because they become too discouraged
or intimidated.

Clearly, whistleblowing presents knotty problems for the manager.
If, however, an organization really wants to encourage its employees
to come forward with critical disclosures, there are ways to make
the process easier, say the experts. Companies must begin to set up
a climate conducive to responsible whistleblowing. One big step, suggested
by Miceli, is to select an arbiter who is highly trusted by all and
who is visible.

Additionally, what steps to take when reporting wrongdoing and what
evidence is needed should be laid out for every employee to know--
preferably in writing, with input from all levels. If issues arise,
they should be resolved in a timely way. Companies should communicate
to all workers the actions they took and why. When appropriate, whistleblowers
should be praised and rewarded for their actions. In turn, employees
need to be apprised of their rights and ethical responsibilities as
members of an organization.

Mistreated employees have legal avenues for redress, although many
of these laws are enforced by the same systems in which the charges
originated. Nevertheless, there are signs that whistleblowers will
be afforded some protection from employer reprisals. One of the biggest
stumbling blocks has been that whistleblower protection laws have
evolved inconsistently. There is no coherent body of law that protects
all whistleblowers--state, municipal, federal and corporate (both
public and private companies), says GAP's Devine. And, some laws protect
better than others. As Devine says, "With or without legal changes,
it is a fact of life that when you bite the hand that feeds you,
it tends to slap you, at the least."

This may be alleviated by a bill expected to be introduced by Representative
Patsy T. Mink (D-Hawaii) this spring. The proposal attempts to be
a comprehensive whistleblowing code for corporate, municipal, federal
and state employees who are alleging violations of federal law. Some
200 companies and public policy groups have petitioned Congress to
extend whistleblowing protection.

Mink's proposal stipulates a due process hearing by a U.S. Department
of Labor administrator. Also, the case must be adjudicated by legal
standards of the Whistleblower Protection Act of 1989. In part, it
says that if an employee alleges he or she was discriminated against
because of whistleblowing as a contributing factor, the employer has
to prove legitimate independent grounds for its actions. Additionally,
when a whistleblower files a reprisal complaint, the allegations
of wrongdoing will simultaneously be forwarded to law enforcement
and federal agencies for investigation.

Congress is slowly showing some muscle. Last year it refused to re-
authorize the U.S. Office of Special Counsel. It was created in 1978,
ostensibly to assist federal employee whistleblowers, but the OSC
had been widely criticized for hampering and intimidating them over
the years.

Yet, the False Claims Act has been criticized as counterproductive
because it provides monetary incentives to employees to bypass internal
reporting systems, while the Federal Sentencing Guidelines (see "An
Unblinking Look at White-Collar Crime," page 10) require corporations
to set up these systems. In addition, recent amendments to the act
have stipulated that if wrongdoing isn't reported immediately, the
whistleblower has less of a right to share in eventual damages.

Here's What You Get

What happens to whistleblowers after the fact? It is like getting
a divorce, says Mary Louise Cohen, a partner at Washington-based Phillips,
Cohen & Goldstein, and an advocate for whistleblowers in false claims
cases. "They may have had 25 years at the company. They give up their
identities and fulfilling relationships."

Counsellor Soeken and other experts advise whistleblowers to leave
their careers and to start fresh in other lines of work--because their
actions have effectively blacklisted them. Most whistleblowers, while
avowing they would sound the alarm again under the same circumstances,
would rather never have gone through the turmoil, even if they were
vindicated and if they received millions of dollars in settlement.
They wish the occasion to blow the whistle--the wrongdoing--had never
occurred.

But at least one whistleblower says he wouldn't do it again. In 1975,
William C. Bush, then a 50-year-old aerospace engineer in the National
Aeronautics and Space Administration (NASA), challenged agency policies
that kept workers inactive. Threatened with dismissal, Bush saw his
grade level reduced and his salary cut by $10,000. He was eventually
given a clerical job. It took more than three years for him to be
reinstated.

Bush also blew the whistle on a private NASA directive (later rescinded)
disallowing executive leadership training programs for employees after
age 40. Eventually, the Supreme Court ruled 9-0 against Bush, saying
that federal employees did not have the constitutional right to blow
the whistle.

Bush retired from NASA in 1986 and now suffers from several stress-
related illnesses he says were brought on by continual harassment.
One of the country's best-known former whistleblowers, he has maintained
a support network for others and has pleaded their causes to members
of Congress, the press and concerned organizations. Although less
active now, Bush says he still receives a couple calls a week from
whistleblowers.

"Hell, no, I wouldn't do it again," Bush asserts. "I ruined my life,
my wife's life. And, I wouldn't do it anonymously, either. There
is no protection whatsoever."

BRIEFCASE

The good news is, there are methods in place at a growing number of
corporations for employees to report wrongdoing. The bad news is,
businesses usually establish these procedures after someone has blown
the whistle--and they continue to mismanage whistleblowing.

~~~~~~~~

By BARBARA ETTORRE

Inset Article

"WOULD I DO IT AGAIN? YOU BET"

When Robert A. Bugai realized that he would have to blow the whistle
in the early '80s, he made a "premeditated and deliberate" decision
to learn about what he was getting into. "I took the time to find
out," says Bugai, 37. "I researched whistleblowing at the library.
I sat down and considered the cost--mentally, financially, physically,
emotionally and spiritually."

When Bugai decided to go ahead, he blew the whistle on college marketers,
which he figures is currently a $140 million market. These are firms
hired by advertising agencies to get their clients' products and services
(credit cards, car rentals, periodicals, grooming aids, dorm room
supplies, apparel) to college students.

Beginning as a student in 1974, Bugai worked on a commission basis
for various college marketing firms, supplying placards, posters,
product samples, magazines, stand-up card displays and other ad tools
to be placed on college campuses. Trouble was, Bugai had found the
products and ad messages weren't reaching the intended audience.

Bugai found that campus representatives were filling out job completion
forms--while posters and other sales materials and samples languished
undistributed in campus storage closets and basements and empty vandalized
merchandise racks went unrepaired and un-filled. Posters were ripped
off bulletin boards and were not replaced. College newspaper organizations,
which had payment contracts with marketers for inserting their clients'
ads in newspapers, were not being paid.

Bugai went back to the library, taught himself investigative techniques
and went to the clients, documenting his charges with photographs
and legitimately retrieved samples, many of them bearing original
wrappings and shipping documents. Twice he was taken to court by the
marketers, but both cases were settled before trial. When threatened
with a court action, Bugai would write a polite thank-you letter saying
how honored he was to have such a formidable opponent. "I wasn't going
to be nasty," he says. "I wanted to give positive reinforcement to
other whistleblowers."

In 1985, Bugai made his expertise formal by founding College Marketing
Intelligence, based in North Arlington, N.J., offering advice, competitive
intelligence and marketing programs on his own. "I would encourage
people who are thinking of being whistleblowers to think about the
real cost involved," he says. "Would I do it again? You bet.".

Inset Article

IF YOU ARE BLOWING THE WHISTLE

There is a wealth of advice avail- able from ex-whistleblowers, counsellors
and advocates. The following strategies are from the Government Accountability
Project:

Talk everything over first with your family or loved ones.

In a non-accusatory manner, first try to work within the system, involving
several layers of management, before going outside the organization.
Be aware that sounding the alarm may trigger a cover-up.

Develop a specific record-- keep a factual log, documenting both wrongdoing
and any harassment you receive.

Make a detailed memorandum for the record, when you need a permanent
record of an important event or conversation. Sign it, date it, and,
if possible, have someone witness it. If you believe your word will
be challenged, you can apply the "poor person's copyright": mail a
copy to yourself, and keep it, unopened, until it is needed.

Pinpoint and copy key records before drawing attentionur allegations.
You may be denied access later.

eate a larger support circle, a constituency of those outside the
organization who would benefit from the exposure of your allegations.

Seek the help of specialists, organizations that assist whistleblowers.

Inset Article

WORKBOOK

Few managers are ever comfortable hearing from their subordinates
that a problem exists in the company. As a manager, how can you develop
an atmosphere in which it would be likely your people will come to
you if they know of wrongdoing? Here are a few timeless suggestions:

Don't play favorites, above or below you.

Keep an open-door policy so that your staff knows you are available
and accessible. Ivory/towers have fallen; you should already be listening
to your people every day.